ISLAMABAD: Federal Board of Revenue (FBR) on Monday decided to release missing amounts of sales tax refunds that were stuck up due to design flaws in the Fully Automated Sales Tax e-Refunds (FASTER) System.
In this regard the FBR issued Sales Tax Circular No. 03 of 2020 to prescribe standard procedure for sanctioning of missing amounts stuck in FASTER system due to system glitches.
The FBR said that in the wake of rollback of zero-rating extended through SRO 1125 of 2011 issued under Section 3(2)(b) and (6); 8(1)(b); and 71 of the Sales Tax Act, 1990 with effect from January 01, 2012, the FASTER system was introduced to process and sanction exporters’ refunds expeditiously.
Although, FASTER was rolled out inside the very first quarter of tax year 2020, yet it continued to malfunction on multiple counts producing suboptimal outcomes, the FBR added.
“One evidence of FASTER’s malfunctioning was that the system would simply miss out on sales tax credits of various taxpayers stalling processing of their refund claims,” the FBR said, adding that this system glitches created problems for exporting taxpayers in terms of uncertainty and stuck-up liquidity, and for the tax administration in terms of credibility deficit.
The FBR said that the matter was analyzed threadbare at the head office, and found out that the problem of missing amounts cropped up due to the very designing of the FASTER module plausibly on three counts, namely:
(i) FASTER was programmed to pick the least of the three opening balances of carry forward of previous month from (a) sales tax return; (b) Annex-H; and (c) the e-RPO generated;
(ii) FASTER module’s non-synchronization with STRIVE i.e. Serial 7a and 7b of the Sales Tax Return; and
(iii) Misapplication of section 8b to certain exporters in FASTER module.
“These design flaws resulted in wide-going anxiety amongst the exporters’ community as large number of missing amounts claimed by them was not being reflected on their e-RPO after processing by the system,” the FBR said, adding that the matter having two dimensions, that is, improving the system design for future glitch –free processing of refund claims in FASTER, and devising a mechanism to deal with the past missing amount cases expeditiously and judiciously, has been resolved as follows:
(i) Future Processing Module
The problem of opening balance has been overcome by de-linking the opening balance of Sales Tax Return and Annex – H effectively, and linking it to the previous e-RPO alone. Going forward, this improvement in the FASTER module will not only solve the issue of missing amounts arising due to opening balances but also the issue of non-synchronizing of FASTER system with the Sales Tax Return and application of Section 8B on certain exporters.
(ii) Process of Past Missing Amounts
The issue of past missing amounts has been solved as under:
(a) That, in all cases wherein the missing amounts could be effectively pulled up by the system, have already been communicated to taxpayers for re-filing after adequate modifications in the refund claims/sales tax return;
(b) That, in all remaining cases, where a taxpayer believes that a material amount of his refund claims has been unaccounted for, he may apply to the Deputy Commissioner concerned; and
(c) That, the deputy commissioner will examine the case and after due verification, will sanction the due amount.
The FBR directed chief commissioners concerned to keep a complete log of the pending missing amount refund cases in their formations and ensure their disposal and processing in the shortest possible time as per law.